Cenvat credit exclusion for motor spirit applies only to petrol, not every Heading 2710 product, absent proof of market identity.

Rule 2(g) of the Cenvat Credit Rules, 2002 was construed as excluding only motor spirit commonly known as petrol, not every product classified under Heading 2710. Special boiling point spirit, naphtha and similar inputs could not be denied credit merely because they fell within the same tariff heading; the Revenue had to prove with evidence that the goods were in fact commonly known in the market as petrol, and no such proof was produced. Cenvat credit was therefore admissible, and the penalty issue did not survive.

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Issues: Whether Special Boiling Point Spirit and similar inputs fell within the expression "motor spirit commonly known as petrol" so as to be excluded from the definition of inputs under Rule 2(g) of the Cenvat Credit Rules, 2002 and whether Cenvat credit was therefore admissible.

Analysis: The exclusion in Rule 2(g) was held to be confined to motor spirit commonly known as petrol and not to every form of motor spirit falling under Heading 2710 of the Central Excise Tariff Act, 1985. The classification material showed that Heading 2710 includes several varieties such as special boiling point spirits and naphtha, and the Revenue produced no test report or other evidence to establish that the inputs in question were commonly known in the market as petrol. The reference to petroleum-related materials did not establish legal identity between all motor spirits and petrol, and the Court found that naphtha and similar products could not be treated as petrol merely because they fall within the same tariff heading.

Conclusion: The inputs were not excluded by Rule 2(g) of the Cenvat Credit Rules, 2002, and the assessee was entitled to Cenvat credit. The penalty issue did not survive.

Final Conclusion: The assessee succeeded on the core credit issue, and the Revenue's challenge failed.

Ratio Decidendi: An exclusion limited to "motor spirit commonly known as petrol" cannot be extended to all motor spirits under the same tariff heading unless the Revenue proves, on evidence, that the goods are in fact commonly known as petrol.

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